Want to compete with P2P? Raise your prices.

The website of the Harvard Business School features an interesting interview with Ramon Casadesus-Masanell, who is a professor at that very school and who has been researching the competitive marketplace of P2P and iTunes. Casadesus-Masanell has especially been looking into the question of how Apple can compete with free P2P networks - and his answers might surprise you:

"Our analysis reveals that, contrary to intuition, prices low enough to "kill" p2p are not optimal in large markets. The industry is better off setting higher prices and attracting those consumers ready to pay due to congestion."

He does however believe that P2P won't go away, but will be getting better and more convenient. So those higher prices might just be a temporary boost to the bottom line. Casadesus-Masanell thinks that in the long run record labels need to switch to a completely different business model:

"At a more concrete level, given that p2p file sharing networks are likely to improve in performance as Internet infrastructure develops, the content industry must make tough choices regarding their revenue models. Moves towards monetizing products not subject to costless replication and distribution, such as live concerts and merchandising (for music) and product placements (for movies and network shows), will become essential for the financial health of media companies."